' The dispute arose out of a contract for construction of Cantonment Public High School, Multan.
This dispute was referred to a Committee of Arbitration comprising Lt.-Col. (Retd.) Farooq Ali Qureshi as Chairman, Mr. Iqbal Muhammad Bhatti, Advocate, Mr. Billimoria, Garrison Engineer and Assistant Garrison Engineer. This Committee was constituted on 8-3-1979. Some proceedings were taken in April, 1979. On 3-4-1982, the respondent No,1 filed an application under section 14 of the Arbitration Act, 1940. The petitioner and respondent No,2 were cited as respondents in the said application. In this application it was averred that respondent No,2 was appointed sole arbitrator by the parties and that he has pronounced his award and communicated the same on 10-3-1982 where under the petitioner has been held liable to pay a sum of Rs,1,73,789.17 to the respondent No,1.
A prayer was made that award be got filed in the Court and a judgment be passed in terms thereof. The respondent No,2 engaged a counsel and filed a reply which is signed by him as well as his counsel Mian Jalil Ahmad, Advocate. In the said reply, the respondent No,2 admitted the assertions of respondent No,1 that he was appointed as a sole arbitrator. He also stated that he has communicated "his award" to the parties. The petitioner, however, contested the said application and denied that respondent No,2 was appointed as a sole arbitrator. It was also averred that the award is a result of collusion inter se, the two respondents. It was also pointed-out that the respondent No,2 was issued notices on 8-4-1982 and his counsel made appearance on 15-6-1982 but the reply was typed on 6-4-1982 i,e,, even before the notices were issued to him. It was also stated that the respondent No,2 had no authority to act as a sole arbitrator. The matter remained pending when it was ordered that award be filed on 20-10-1982. On the said date, it was noted that the award was on the file and case was adjourned for filing of objections to 20-11-1982. The objections were filed on the said date. Issues were framed. Evidence of the parties was recorded.
Learned Trial Court proceeded to refuse to set aside the award'and to make the same Rule of the Court vide an order, dated 13-4-1988. An appeal filed by the petitioner was heard by a learned Additional District Judge, Multan who dismissed the same on 16-10-1995.
2. Mr. Muhammad Ali Gillani, Advocate, learned counsel for the petitioner argues that both the Courts below have acted with material irregularity in exercise of their jurisdiction while passing the impugned orders. Vehemently urges that not only the misconduct of the alleged arbitrator was established on record but the very Arbitration proceedings were non-existent and as such a nullity.
Mr. Kanwar Akhtar Ali, Advocate, on the other hand has' tried to support the impugned orders.
3. I have gone through the records appended with this Civil Revision, with the assistance of the learned counsel for the parties.
' I have already referred to the pleadings relevant to the lis now before me. In the application as also in the reply filed by the respondent No,2, it has been pleaded by the respondent No,1 and admitted by respondent No,2 that the latter was appointed as a sole arbitrator. The award (undated) is available on record at Exh.R-1. In para.2, the respondent No,2 states that he was requested to act as a sole arbitrator. In para.3, he proceeds to make and publish the award as such. This award does bear the signatures of respondent No,2. It was, however, pleaded by the petitioner that in fact, there was a Committee of arbitration constituted as detailed above, and that the said Committee did not conduct any proceedings and that the respondent No,2 had no jurisdiction to proceed in the matters as a sole arbitrator or to make and publishes award as such.
This plea was repeated with some elaboration in the memo. Of objections filed against the award on 7-11-1982. The case of the petitioner was that the Arbitration Committee had not conducted any proceedings and had not arrived at any conclusion and the matter had ended and that it was years after that both the respondents colluded with each other and fabricated the award to cause wrongful loss to the petitioner. The respondent No,1 took a complete voile-face in reply to these objections. It was admitted that on 8-3-1979 a Committee comprising five persons with respondent No,2 as its Chairman was constituted. The respondent No,1 also filed to provide an excuse for respondent No,2 describing himself as sole arbitrator.
4. It is further interesting to note that after having admitted, without any demur the contents of the initial application under section 14 of the said Act alleging that he was appointed as a sole arbitrator by the parties, the respondent No,2 entered the witness-box as A.W.1 on 13-3-1989 and made a statement on oath that there was a Committee of Arbitration and that he was its Chairman. He says that inadvertently he describes himself as sole arbitrator in the award.
According to him, the last meeting of the Committee took place on 16-4-1979. He produced a copy of those proceedings as Exh.A-2. In cross-examination, he stated that he had been preparing notes in respect of the meeting of the Committee but they are not available as he has torn-up the same. He admits that he did not make any attempt to obtain the signatures of the other members of the Committee on the award.
He admits that while he was writing the award, no member of the Committee was present. He admits that when the award was being typed on stamp paper, even at that time no member of the Committee was present. When confronted as to why he waited till 10-3-1982 to show the award the light of the day, when the last meeting, according to him, was held on 16-4-1979, he says that one of the members had suffered a heart-attack while he himself had gone to Oman. He was unable to state any particulars of his leaving the country for Oman. He states that he remained in Oman only for one and half months. A.W.2 is Mr. Muhammad Iqbal Bhatti, Advocate who admits his signatures on the proceeding Exh.A-2. A.W.3 is Mr. Billimoria. He also admits his signatures on proceedings Exh.A-2. A.W.5 is Nisarul Haq a partner of the respondent No, 1.
5. To my mind, the entire evidence led by respondent No,1 could not have even been looked into. It was clearly pleaded by both the respondents in their respective pleadings that he was the sole arbitrator, the award also mention him as the sole arbitrator. The learned Courts below ought not to have allowed the respondents to take a 360 degrees turn and to come-out with the inconsistent plea and the evidence thereon. Even the evidence on a proper reading speaks for the falsity of its contents. There is no explanation whatsoever as to why Muhammad Iqbal Bhatti, Advocate and Mr. Billimoria did not sign the award. The A.W.2 and A.W.3 admittedly the representatives of the respondent No,1 on the said Committee of Arbitration, have made deliberately false statement that it was unanimously agreed to grant the amount stated in the award to the respondent No,l. Exh.A-2 does not contain any such suggestion. Besides if this was a unanimous decision as suggested by the respondent No,2 and the cronies of respondent No,1 A.W.2 and A.W.3, there is no explanation as to why and what was the hurdle in immediate drawing up and publishing the award. All this gives a credibility to the version of the petitioner Department that the Committee could not arrive at any decision and at a much later stage, the respondents colluded with each other to cause wrongful loss to the petitioner.
6. I completely fail to understand as to how the learned Courts below have treated the award Exh.R-1 to be award of the majority of arbitrators. Section 10(3) of the Arbitration Act, 1940 covers the situation. It provides that where more than three arbitrators are appointed, the award of the majority or if the arbitrators are equally divided in their opinion, the award of the umpire shall, unless the arbitration agreement otherwise provides, prevail. Section 14(1) of the said Act provides that when the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof. The award had not been signed by the arbitrators within the meaning of section 14(1) of the said Act.
7. Apart from violation of the general terms pertaining to arbitration in the said Act, the ' award and the proceedings are also violative of the statutory provisions contained in the Cantonment Act, 1924 dealing with the constitution and conduct of a Committee of arbitration. In particular section 265(1) thereof which provides that the decision of every committee of Arbitration shall be in accordance with the majority of \Totes taken at a meeting at which the Chairman and at least three of the other members are present. Even if I accept the statement of the respondent No,2 and the A.W.2 and A.W.3, the decision A yet falls short of the said requirement of the said provisions of Law.
8. The learned Additional District Judge has held the objections to be barred by time without any rhyme and reason. He has done this in oblivion of the factual position apparent on the face of record. It is a matter of record that for the first time it was on 20-10-1982 that it came to the notice of Court itself that the award is present on the file. He ought to have given a notice to the parties but since the counsel was present, the said dispensation need not be criticised. Here again the learned Trial Court did not act in a proper manner inasmuch as it ought to have warned the parties to file objections within the time prescribed by Law. On the other hand, he proceeded to adjourn the case to 20-11-1982 for filing of the objections. Had the objections been filed on 20-11-1982, they would have been barred by time by one day. However, the petitioner was an alert in view of the conduct of the two respondents which had become evident on the face of record by them and did not take any chance and filed the objections on 7-11-1982. These objections were, thus, very much within time. While maintaining upon the competency of the appeal, the learned Additional District Judge completely forgot that appeal against the decree passed under Arbitration Act is provided for under section 17 of the Act on the sole ground that the decree is not in accordance With award.
While appeal against an order refusing to set aside an award is provided under section 39 of the Arbitration Act, 1940 and the appeal being against an order, it was only to bear prescribed court- fee and not ad velour court-fee.
9. I am, therefore, constrained to hold that in this particular case, the pleadings and the evidence on record have been deliberately misread by the two Courts below and the orders passed by them respectively cannot be sustained. Accordingly I allow this Civil Revision and set aside the impugned orders of both the learned Courts below and the award of respondent No,2 with costs throughout.